Raju ORDER
Ramesh Nair, Member (J)
1. The brief facts of the case are that the appellant had obtained work orders from Gujarat State Police Housing Corporation Limited (GSPHCL for short) and accordingly during the year 2009-10 to 2011-12 had constructed residential quarters for the staff of the Gujarat Police. The appellant had also carried out construction of residential complex for Rajkot Municipal Corporation (RMC for short) as sub-contractor of M/s. Avadh Construction. The appellant had not paid service tax on the said construction service provided to GSPHCL and RMC, therefore the demand was raised and confirmed under the category of Residential Complex Service.
2. Shri Amal Dave, Ld. Counsel appearing on behalf of the appellant fairly concede that the appellant being sub-contractor is liable to pay service tax as held by the Larger Bench of this Tribunal in the case of CST, New Delhi vs. Melange Developers Pvt. Limited - MANU/CE/0244/2019 : 2019-TIOL-1684-CESTAT-DEL-LB. However, he submits that the entire demand is time-barred as the show cause notice was issued beyond the normal period. He submits that there is no malafide on the part of the appellant. The appellant had not paid service tax as there was confusion that whether the sub-contractor is liable to pay service tax when the entire service tax was paid by the main contractor. On this issue there were conflicting judgments and finally the issue was settled by the Larger Bench in the case of Melange Developers Pvt. Limited (supra). Therefore, in these circumstances, it cannot be said that the appellant suppressed the facts or had malafide intention to evade the service tax. Therefore, the demand for the longer period is time-barred. In support, he relied on the following judgments:-
(a) CCE & ST vs. Saurashtra Cement Limited - MANU/GJ/0288/2016 : 2016(42) STR 632 (Guj.)
(b) Marsha Pharma Pvt. Limited vs. CCE, Vadodara - MANU/CS/0092/2009 : 2009(248) ELT 687 (Tri. -Ahmd.)
(c) CCE, Vapi vs. Kolety Gum Industries - MANU/SC/0656/2016 : 2016 (335) ELT 581 (S.C.)
(d) Copy of CESTAT order No. A/11071/2019 dated 05.07.2019 in case of M/s. Hi Scan Pvt. Limited passed by CESTAT Ahmedabad.
(e) Copy of CESTAT order No. A/11715/2018 dated 30.07.2018 in case of M/s. Dharti Automobiles passed by CESTAT Ahmedabad.
(f) CCE, Delhi vs. Soni & Toni Electrical - 2007(217) ELT 457 (Tri. -Del.)
(g) Principal Commissioner GST & Central Excise, Chennai vs. C. Kamalakanan - 2018 (18) GSTL 589 (Mad.)
(h) Principal Commissioner vs. SKS Ispat and Power Limited - 2018 (14) GSTL J75 (Chhattisgarh)
(i) CST, Delhi vs. Melange Developers Pvt. Limited - 2018-TIOL-1983-CESTAT-DEL
(j) CST, New Delhi vs. Melange Developers Pvt. Limited - MANU/CE/0244/2019 : 2019-TIOL-1684-CESTAT-DEL-LB
(k) BCC Developers and Promoters Pvt. Limited vs. Commissioner of C. Ex., Jaipur - MANU/CE/0431/2017 : 2017 (52) STR 22 (Tri. - Del.)
(l) Power Mech Projects Limited vs. Commissioner of Guntur - MANU/CH/0122/2016 : 2017(48) STR 165 (Tri. - Hyd.)
(m) National Building Construction Corpn. Limited vs. CCE & ST. Patna - 2011 (23) STR 593 (Tri. -Kolkata)
(n) Order No. A/11314/2013 dated 07.10.2013 passed by the Hon'ble CESTAT, Ahmedabad in case of M/s. Mahalaxmi Infracontract Limited.
(o) Order No. A/12878/2017 dated 06.10.2017 passed by the Hon'ble CESTAT, Ahmedabad in case of M/s. SAI Consulting Engineers Pvt. Ltd.
3. Shri Gobind Jha, Ld. Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that the confusion on the issue that whether the sub-contractor is liable to pay service tax or otherwise has arisen only due to issuance of Board Circular in the year 2002, clarifying that when the main contractor discharged the service tax liability, sub-contractor need not to pay service tax. Subsequently, the Board Circular was modified in the year 2005 according to which the assessee, even though acted as sub-contractor, required to pay service tax. Therefore, after issue of Board Circular in the year 2005, there was no reason to believe that the sub-contractor is not liable to pay service tax. He further submits that the appellant failed to obtain registration therefore, there is a clear suppression of facts on their part. He further submits that all the judgments on limitation are related to the issue on merits or pertaining to the period prior to the issuance of Board Circular in the year 2005 and in the present case, the period involved is 2007-08 which was much after the Board modified the circular in 2005. Therefore, there cannot be a bonafide belief for non-payment of tax. He placed reliance on the following judgments:-
(a) Deogiri Infrastructure Pvt. Limited vs. Commissioner of C. Ex. Aurangabad - MANU/CM/0530/2017 : 2017 (5) GSTL 45 (Tri. Mumbai)
(b) Madhukar Mittal vs. Commissioner of C. Ex. Panchkula - MANU/CJ/0062/2017 : 2017 (4) GSTL 412 (Tri. Chan.)
(c) Madhukar Mittal vs. Commissioner - MANU/CJ/0062/2017 : 2017 (3) GSTL J-317 (P&H)
(d) Central India Engineering Company vs. Commissioner of C. Ex. Nagpur - MANU/CM/0453/2016 : 2016 (44) STR 657 (Tri. Mum.)
(e) Exemption Notification No. 28/2010-ST : MANU/DSTX/0046/2010 dated. 22.06.2010 regarding Construction of Residential Complex service.
(f) Max Tech Oil & Gas Services Pvt. Limited vs. Commissioner of Service Tax, Delhi - MANU/CE/0456/2016 : 2017 (52) STR 508 (Tri. Del.)
(g) Krishna Engineering Works vs. CCE & ST., Vadodara - MANU/CS/0199/2018 : 2019 (22) GSTL 409 (Tri. Ahmd.)
(h) Sew Construction Limited vs. CCE, Raipur - MANU/CE/0617/2010 : 2011 (22) STR 666 (Tri. Del.).
4. Heard both sides and perused the record. We find that there is no dispute on the taxability as has been held by the Larger Bench that the subcontractor is independently liable to pay service tax even though service tax liability has been discharged by the main contractor. Therefore, in the present case, demand on merit is clearly sustainable. As regards the limitation argued by the ld. Counsel, we find that the confusion arose due to Board Circular issued in 2002 wherein the Board has clarified that in case of sub-contractor, the service tax is not payable by sub-contractor if service tax is discharged by the main contractor. However, the Circular was amended in 2005 and thereafter the issue became clear that the sub-contractor was required to pay service tax and the conflicting judgments were due to the earlier Board Circular. However, after 2005, there was no reason for the assessee to believe that the sub-contractor is not liable for payment of service tax. If any assessee is of the belief that being sub-contractor they are not liable to pay service tax, in the light of amendment in Circular in 2005, the assessee should have approached the department and make the position clear regarding their bonafide belief. But in the present case, the appellant did not approach the department regarding their bonafide belief nor they obtained the registration. Therefore, when the Board issued amendment in 2005, it cannot be said that the appellant entertained bonafide belief correctly.
5. Further, we find that the judgments cited by the ld. Counsel on the issue of limitation are pertaining to the period prior to the Board Circular whereby the sub-contractor was made liable to pay service tax. Therefore, the said judgments cannot be made applicable for the subsequent period particularly in the present case which is for the period 2007-08 and 2008-09. We also find that in the case of Max Tech Oil & Gas Services Pvt. Limited (supra), on the identical issue of taxability on sub-contractor, it was clearly held that extended period is invokable. Similarly, in the case of Sew Construction Limited (supra), the Tribunal has dealt with the liability to pay service tax by the sub-contractor and has clearly held that since registration was not sought, claim of bonafide belief cannot be accepted and demand for the extended period was maintained and penalty was also intact.
6. In view of our above observations, the impugned order is upheld, the appeal is dismissed.
(Pronounced in the open court 05.08.2019)
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